Jade Jean Blog

Nora raised her hand. “I’m just beginning to realize that flexibility, terms and price are very important.”

“It’s all part of learning where to tap. For the time being, concentrate on finding motivated sellers. I’ll walk you through the negotiation process until you are comfortable with it. It’s quite like playing tennis,” I said, turning to Steve, who I knew was a tennis buff. “You can’t expect to play well the first time you pick up a racket. With practice, you develop a sense of timing, anticipation. Your opponent rushes the net, and you learn to decide in a split second whether to pass him, lob it over him or hit it straight at him. The same holds true with the techniques of negotiating. The seller asks point-blank for an offer. You decide in a split second to change the subject—to lob it over him till later when the pressure’s off. The seller asks you how much down payment you have. You pass the ball right by him. You say, ‘How much do you need?’

“Sometimes you shoot straight. ‘Mr. Seller, let’s not play games. I’m an investor. I like to buy properties at bargain prices with small down payments. I can pay cash if the deal is right. If you can win this way, I’ll make you an offer. If not, here’s my card.” An honest, straightforward approach works wonders with the right seller.

“In any case, always be cordial. You never can tell when a fish might be attracted to your bait. Don’t scare them away.”

Mary raised her hand. “Speaking of bait, how often should I run an ad in the paper? We didn’t get an overwhelming response out of the ad we ran a few days ago.”

Taken From:The ROAD TO WEALTH

“Sell it?” answered Steve hesitantly. “Let somebody dicker with me just enough so I could get five thousand out.”
“But it’s rented. Who would want to buy it?” I asked, trying to test him.

“An investor,” someone guessed. “Good. An investor who needs a tax shelter. And you can afford to find such an investor because the tenant is making your monthly payments. I can see the lights coming on for Mary.”

“Slowly but surely,” she said. I then took them through an analysis of what we would do if Mary’s seller had wanted to be cashed out at a low price. This concerned the Challenge team because they couldn’t imagine where they could get their hands on a lot of cash. The first step is to get a discount of at least 20 to 30 percent off the market price (not to be confused with asking price). Thus, a $44,000 house should sell for $35,000 or less 80 percent of $44,000). We’d assume the existing $21,000 loan and agree to pay $14,000 cash for the seller’s equity by bringing in a partner. Once the property is fixed up, it is sold at its increased value of $48,000. The newbuyer refinances the house, and the new loan pays off the existing$21,000 loan, returns your partner’s $14,000 down payment and leaves a gross profit of $13,000. Assuming $3,000 expenses for fix up and financing, you are left with a net profit of $10,000 to split with your partner. Five thousand dollars to him. Five thousand dollars to you. The partner gets a $5,000 return on a short-term $14,000 investment. That’s over 30 percent.

Taken From:The ROAD TO WEALTH

“You’re all right so far,” I responded. “OK,” Philip continued, feeling more confident, “then you either sell it or rent it. Probably rent it cause I need a quick five hundred to give the seller for the down payment.”

“Not bad for a beginner! You put an ad in the paper and rent it out. When the renter moves in, you charge him the first month’s rent and the last month’s rent plus a security deposit. That could be as much as fifteen hundred dollars, depending on your market. And with this money you buy the property. The tenant actually buys the property for you. And you’d have several hundred dollars left over for closing costs, repairs or a cushion for future repairs.”

I paused a moment to let it sink in. That seemed to solve Philip’s problem, but Steve still wanted to know where to get the four hundred dollar monthly mortgage payment. I waited until he came up with the answer himself.

“The tenant pays the four hundred dollars.” “Good. Suppose it’s worth $44,000 today, and you increase its value to $48,000 with minor fix up. That means you have an equity of $9,000. The property is now ready to farm—to sell, keep, refinance or trade. Which is the quickest method to yield $5,000 cash?”

Taken From:The ROAD TO WEALTH

They all nodded in agreement. “Let’s assume that the seller agreed to accept our offer of $39,500ten percent below market—with only $500 down. How would we pay him his equity?”

“In monthly payments?” “Right. We’d assume his loan of $21,000 and on the balance— $18,000 after our $500 down payment—we’d negotiate to pay the seller so much a month. Let’s say the bank payments are $200 a month, and the seller will take $200 a month for his equity. Our total monthly payments would be $400.”

“But,” Steve said, “I don’t have four hundred a month to spare.” Philip raised his hand. “And where would I get the five hundred down to buy the property in the first place?”

“You tell me,” I shot back, wanting to make him think for himself. “First I tie the property up with a postdated check for five hundred dollars and a closing in thirty days. Tell me when I’m wrong now.”

Taken From:The ROAD TO WEALTH

Mary looked puzzled. “And that’s where I get lost.” Nora and Steve were also unsure of what to do next. I explained that this situation was particularly tough because the seller really wasn’t flexible. Things get a lot easier when you’re dealing with a person who is motivated to act. I singled out Philip to drive my point home.

“Philip, it’s not easy to sell flowers to someone who doesn’t want them. Don’t waste your time with him. Similarly, it’s not easy to buy property from someone who doesn’t really want to sell.”

I told them of an airline pilot mentioned in one of their success sampler tapes. Every two weeks he’d have to fly to Dallas to mow the lawns of his investment property. It didn’t take him long to become a don’t-wanter. I asked them if they would like to know what I would have done if Mary’s seller had been flexible.

Taken From:The ROAD TO WEALTH

“The other couple didn’t stand a chance. How can you expect to make it without a clear idea of where you are going? Up to this point in our training I have not shared with you a detailed road map only three vague guidelines: Find it. Fund it. Farm it.

“Now I’m going to furnish each of you a Master Checklist. This will be your road map. If you ever feel confused, not knowing where you are, you can pull out your Master Checklist and check your progress.

“Thus far in our training we’ve spent a lot of time on the first step— find it. It’s time to go deeper. As opportunity fishermen, you need to place many lines in the water, each hook with a different kind of bait on it—thus maximizing the possibility of attracting a hungry fish. I suggestthat you have a minimum of five lines in the water every single day. You will need to sift through at least five different sources of don’t-wanters. Such as running your own ad in the paper or using a creative Realtor.

“As soon as you get a nibble on one of your lines, what do you do?” “Smile,” Steve offered. “Smile and ask questions. Got to score the property. Last night Mary located a property she thought had a glitter to it. But when she checked further, she found it was a cubic zirconium. But if it had scored well, she would have gone to the next step—writing an offer.”

Taken From:The ROAD TO WEALTH

The final session was scheduled in the seminar room at the Daniele Hotel. There were still several vital pieces of the puzzle to be put in place.

“Are your buckets getting full?” I asked. “I feel like you’ve got a bucket and I’ve got a thimble,” Karen said. “And my thimble overflowed a long time ago. I’m lost.”

“I know how you feel. Just the other day David and I got lost trying to find Nora’s house. Took the wrong freeway. We didn’t panic. Just pulled out a map, figured out where we were, selected a new route and finally arrived at our destination. That’s what a road map does—gives you perspective, the big picture. And if you don’t have that, it’s easy to get lost.

“Let me illustrate.
“Just before speaking at a conference in Acapulco a few years ago, I had a brainstorm. I ran downstairs to the hotel variety store and bought three copies of an inexpensive local puzzle—a picture of the Hyatt Hotel located on Acapulco Bay. I disassembled one of the puzzles and later dumped the pieces in front of a couple in the front row at the conference, challenging them to see how fast they could put it back together .I gave the same challenge to another couple, except this time as I dumped the mixed-up pieces in front of them I also gave them a completed puzzle to use for reference. Can you guess which couple finished first?”

“The one that had a clear picture of where they were going,” Mary responded.

Taken From:The ROAD TO WEALTH

If you plan to be successful you will need a group of experts to guide you.

Attorney
Accountant
Property Management
Mentor
Realtor
Banker

The key attributes are knowledge and creativity. You are looking for creative blue-vasers, just like yourself, who will persist until they find solutions even to the most difficult problems. These are rare talents, and when you find a particularly creative expert, add his name to your growing network. The following tips will guide you in finding creative local experts to guide you.

1. Word of mouth: by far the most effective method. Ask successful local investors which experts they have found effective. One creative professional can usually recommend other experts to round out your network.

2. Attendance at creative financing seminars: Those experts who frequent seminars are usually interested in self-improvement and enhancing their creativity. Ask for their cards.

3. Who’s Who in Creative Real Estate: This publication lists those creative individuals who specialize in real estate services. $25. I highly recommend it. Call 1-805-643-2337 or write P.O. Box 23275, Ventura, CA 93002.

4. An investor/expert: Someone who not only provides client services but also invests for his own portfolio is going to be more understanding of your needs and desires. You can find such individuals at local investment club meetings. For names and addresses of the presidents of investment clubs in many major American cities call my toll-free number, 1-800-345-3648.

Taken From:The ROAD TO WEALTH

“Let’s review, then, what we’ve learned,” I continued. “We learned that a title company officer, such as Nancy, can help us walk through the myriad details that accompany the purchase and sale of a piece of real estate. I’m sure that most of these details, such as trust deed, settlement costs, and title insurance, went right over your heads. It’s all rather confusing at first. But so was baking a cake your first time or learning how to drive a car or preaching your first sermon. It always looks so much worse to the beginner. After your first property, you’ll wonder what you were so afraid of. Nancy is an expert at this. Let her be your guide. That’s what she gets paid for. Nancy becomes a vital part of your network. It is as if this were your own office and Nancy were on your staff. And you don’t have to pay her until she performs. She even tries to make it easy for you to use her.”

“Absolutely,” Nancy agreed. “We try to make it as convenient for the customer as possible. This is our main office here in Clayton; we also have a city office downtown and offices in West County, South County, North County, Charles County and Jefferson County.”

“All successful people rely on a network of experts to call on when necessary,” I said. “You have already begun to establish your own success network. You have me, you have Nancy, and you will be adding bankers, accountants, real estate people. This will become your own mastermind group. And having such a mastermind group is essential to all success. It is a wealth secret.”

Taken From:The ROAD TO WEALTH

“Now,” Nancy continued, “let’s cover two very important documents. The note and the trust deed. Here I have a standard St. Louis County note.” She held up a piece of legal-sized paper for us to see. “When filled out, it shows the amount of the loan that is being made to you, the interest rate, the amount of the monthly principal, interest and payments, and when the payments are due. This note in turn is secured in the state of Missouri by a deed of trust. A deed of trust actually secures the amount of money that the lender’s lending you on this note with theproperty that you’re buying. In other words, if you don’t pay that note, the trustee for the bank will foreclose on the property.”

“To say it in fewer legal terms,” I added, “A note is an I.O.U.”—I promise to pay you this much” The seller says, ‘I believe you but just to be sure I want you to sign this other piece of paper called a trust deed, or mortgage” It says, ‘If you don’t keep your word, you’ll have to give the property back” There are other ramifications, but this is the general
picture. Speaking of foreclosure, there were people who this very day, about an hour ago, lost their property.”

“Yes,” Nancy said, “it happens almost every day, at noon, on the steps of the courthouse.” “Why?” Steve wondered. “They didn’t live up to their agreement with the lender,” I answered. “They didn’t make their monthly payments—due to divorce, neglect, bankruptcy, unemployment, all kinds of reasons. Dealing in foreclosures is tricky, so I’d be careful.

Taken From:The ROAD TO WEALTH